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Does Local Business Ownership Insulate Cities from Economic Shocks?

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Author Info

  • Kolko, Jed

    ()
    (Public Policy Institute of California)

  • Neumark, David

    ()
    (University of California, Irvine)

Abstract

We assess a prominent argument for local economic policies that favor locally-owned businesses – namely, that locally-owned firms are more likely to internalize the costs to the community of decisions to reduce employment and hence help to insulate cities from adverse economic shocks. We test this argument by examining how establishment-level employment responses to economic shocks are affected by establishment ownership. We find evidence hat some types of local ownership do insulate regions from economic shocks, although the clearest benefits do not come from small, independent businesses, but instead from corporate headquarters and, to a lesser extent, from small, locally-owned chains.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4415.

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Length: 44 pages
Date of creation: Sep 2009
Date of revision:
Publication status: published in: Journal of Urban Economics, 2010, 67(1), 103-15
Handle: RePEc:iza:izadps:dp4415

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Keywords: employment shocks; employment stability; local ownership;

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References

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Cited by:
  1. Holger Breinlich & Gianmarco I. P. Ottaviano & Jonathan R. W. Temple, 2013. "Regional Growth and Regional Decline," CEP Discussion Papers dp1232, Centre for Economic Performance, LSE.
  2. Jan Peter aus dem Moore & Alexandra Spitz-Oener, 2012. "Bye Bye, G.I. - The Impact of the U.S. Military Drawdown on Local German Labor Markets," SFB 649 Discussion Papers SFB649DP2012-024, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  3. Anil Rupasingha, 2013. "Locally owned: Do local business ownership and size matter for local economic well-being?," Community and Economic Development Discussion Paper 2013-01, Federal Reserve Bank of Atlanta.
  4. Cui, Jingbo & Qian, Hang, 2013. "The Effects of Exports on Facility Environmental Performance: Evidence from a Matching Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149550, Agricultural and Applied Economics Association.
  5. André van Stel & Martin Carree & Emilio Congregado & Antonio Golpe, 2013. "Self-employment and Job Generation in Metropolitan Areas, 1969-2009," Scales Research Reports H201306, EIM Business and Policy Research.

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